To the Members
The Resolution Professional presents to the Members the 28th Annual Report of theCompany for the year ended March 31 2020 which includes the Directors' Report("Annual Report").
INITIATION OF CORPORATE INSOLVENCY RESOLUTION PROCESS (CIRP):
The National Company Law Tribunal ("NCLT") Hyderabad Bench vide Order datedJuly 10 2019 ("Insolvency Commencement Order") had initiated CorporateInsolvency Resolution Process ("CIRP") against your Company based on petitionfiled by the Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code2016 ("the Code"). Mr. Venka Reddy Bathina was appointed as an InterimResolution Professional ("IRP") to manage affairs of the Company in accordancewith the provisions of the Code. Subsequently Hon'ble NCLT vide its Order dated October15 2019 had appointed Mr. Sreenivasa Rao Ravinuthala as Resolution professional of theCompany.
Thereafter pursuant to the Insolvency Commencement Order and in consonance with thestipulation contained in Section 17 of the IBC 2016 the powers of the Board of Directorsof the Company stand suspended and the same are vested and exercised by Mr. Sreenivasa RaoRavinuthala Resolution Professional (RP) w.e.f. July 10 2020. The Adjudicating Authorityhas approved the extension of CIRP for a further period of 90 days after a lapse of 180days vide order dated January 06 2020.
Members of the Committee of Creditors (CoC) in their 7th Meeting held on March 06 2020considered the resolution plans and approved the resolution plan submitted by theConsortium (lead by Ratakonda Vivek Kumar Chartered Accountant) through e-voting held onMarch 12 2020.
The Resolution Professional filed an application under Section 30(6) of the Code beforethe Hon'ble NCLT for the approval of Resolution Plan. The Adjudicating Authority hasreserved the judgement vide its order dated August 18 2020.
Members may kindly note that the Resolution Professional was not in office for theentire period to which this report primarily pertains. During the CIR Process (i.e. fromJuly 10 2019 to March 31 2020) the Resolution Professional was entrusted with themanagement of the affairs of the Company. The Resolution Professional is submitting thisReport in compliance with the provisions of the Companies Act 2013 the rules andregulations framed thereunder ("Act") and the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations").
This Report was discussed in a meeting held with the Key Management persons andthereafter taken on record by the Resolution Professional.
Financial Highlights: (Amount in Rs)
|Particulars ||For the year ended 31 March 2020 ||For the year ended 31 March 2019 |
|Revenue from operations ||-- ||20318079 |
|Other income || || |
|Total revenue ||-- ||239194 |
|Profit before Finance Cost Depreciation & Tax ||-- ||20557273 |
|Depreciation and amortization expense ||(1045169) ||(917228) |
|Finance Cost ||111719 ||67867 |
|Other Expenses ||1300472 ||5360168 |
|Exceptional Item ||698482 ||4821927 |
|Tax Expenses ||-- ||-- |
|Profit/ (Loss) after Tax ||-- ||(4333717) |
|Other Comprehensive Income/(Loss) ||(3155842) ||(6833473) |
|Total Comprehensive Income/(Loss) ||-- ||-- |
| ||(3155842) ||(6833473) |
REVIEW OF OPERATIONS:
During the financial year under review the Company has not achieved any Revenue fromthe Operations as against Rs. 205.57 lakhs during the previous financial year. The Companyrecorded a Net Loss of Rs. 31.56 lakhs as against net loss of Rs. 68.33 lakhs incurredduring the previous financial year.
During the year under review the company has not declared any dividend.
Please refer Note No. 2.9 of the notes on accounts (Financial Statements). Indebtednessin Form MGT-9 under Clause V in this Report.
COVID-19 AND ITS IMPACT:
During the year under review the covid-19 pandemic developed rapidly globally therebyforcing the government to enforce complete lock-down since March 24 2020 of almost alleconomic activities except essential services which are allowed to operate with limitedstaff strength during the lock down period your company continued its operations bystrictly adhering to the minimal staff strength requirement and maintaining socialdistance and other precautions as per government directions.
However as the Company operates in an industry that is considered essential in Indiaand other countries its operations were continuing during lockdown by ensuringappropriate safety measures.
Mrs. Chukka Lakshmi has been appointed as Non-Executive Woman Director of the Companyeffect from November 14th 2018 is proposed as a Non-Executive Woman Director of theCompany. The Board of Directors recommends her appointment at the AGM.
Mr. Dasigi Venkata Surya Prakash Rao (DIN: 03013165) and Mr. Satya Srikanth Karaturi(DIN: 06893793) Directors have placed their resignation before the Company w.e.f. 4thFebruary 2020. Accordingly the Resolution Professional of the Company put the saidresignations before the Committee of Creditors (CoC) but the same were not approved by CoCin their meeting held on 5th February 2020. Therefore the composition of the Board ofDirectors remains same and its powers stand suspended during the year under review.
Pursuant to the provision of section 139 and other applicable provision if any of theCompany Act 2013 read with Rule made there under The statutory Auditors M/s Navitha andassociates chartered Accountants appointed as the statutory Auditors at the last AnnualGeneral Meeting held on 29.09.2017 for a period of Five (5) years till the conclusion of30th Annual general Meeting in the calendar year of2022.
As per the companies Amendment Act 2017 Ratification by members is not required andhence only the information with regard to continuity of auditor is mentioned.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Balarama Krishna Desina Company Secretary in practice to undertake thesecretarial audit of the company. The Secretarial Audit Report is annexed herewith as'Annexure: 1'.
M/s. Gorantla & Co Chartered Accountants perform the duties of internal auditorsof the company and their report is reviewed by the Audit Committee/Resolution Professionalfrom time to time.
The Company has not accepted any deposits within the meaning of Companies Act 2013 andthe rules framed there under.
HOLDING SUBSIDIARY AND ASSOCIATE COMPANIES:
During the year your company is not having any holding subsidiary and associatecompanies.
INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY:
The Chief Executive Officer has represented to the Resolution Professional that theCompany has adopted policies and procedures for ensuring the orderly and efficient conductof its business including adherence to the Company's policies safeguarding of its assetsprevention and detection of frauds and errors accuracy and completeness of the accountingrecords and timely preparation of reliable financial disclosures.
DIRECTORS & KEY MANAGERIAL PERSONNEL
During the year under review the Remuneration & Nominations Committee has notrecommended any person to be appointed as director till the commencement of the CIRP i.e.July 10 2019. Thereafter due to the commencement of the insolvency resolution processagainst your Company as per the provisions of the Insolvency and Bankruptcy Code 2016the powers of the Board of Directors stand suspended and the same are exercised byResolution Professional.
Details of Directors/Key Managerial Personnel Appointed / Resigned:
During the year under review Mr. Husain Shopurwal Company Secretary of the Companyresigned from the post of Company Secretary with effect from April 23 2019.
Mr.Avinash Karingam was appointed as the Chief Financial Officer of the Company w.e.fApril 12 2019. Mr.Avinash Karingam resigned from the post of Chief Financial Officerwith effect from May 23 2019.
Ms. Sree Harshitha Mallireddy Appointed as Company Secretary & Compliance Officerof the Company with effect from August 27 2020.
During the year under review maintenance of cost records and requirements of costaudit as prescribed under the provisions of Section 148 (1) of the Companies Act 2013 arenot applicable to the Company.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY:
The Company had prior to the commencement of the CIR process put in place a VigilMechanism/Whistle Blower Policy. The details of the Policy are also available on thewebsite of the Company i.e. www.proseedindia.in.
The Company Secretary has represented to the Resolution Professional that no Director /
employee has been denied access to the Chairman of the Audit Committee until July 102019 and to the Resolution Professional thereafter and that no complaints were receivedduring the year and the Resolution Professional has relied on such representation.
RELATED PARTY TRANSACTIONS:
All transactions with related parties during the year were in the ordinary course ofbusiness on an arm's length basis. There are no materially significant related partytransactions made by the Company with Promoters Directors or Key Managerial Personneletc. which may have potential conflict with the interest of the Company at large or whichwarrants the approval of the shareholders. Accordingly since disclosure in form AOC- 2 isrequired to be made only of the related party transactions or arrangements that were notat arm's length basis or the material related party transactions that were at arm's lengthbasis in accordance with the Section 188 of the Companies Act 2013 the disclosure inform AOC-2 in terms of Section 134 of the Companies Act 2013 is not required. Furtherthe details of the transactions with Related Party are provided in the Company's financialstatements in accordance with the Accounting Standards.
The policy on Related Party Transactions as approved by the Board of Directors prior tothe commencement of the CIR Process has been uploaded on the website of the Company viz.www.proseedindia.in. None of the Directors has any pecuniary relationship or transactionsvis-a-vis the Company except remuneration.
DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013:
Your Company has always believed in providing a safe and harassment free workplace forevery women employee working with your Company. Your Company always endeavors to createand provide an environment that is free from discrimination and harassment includingsexual harassment.
Your Company has a zero tolerance for sexual harassment at workplace and therefore hasin place a policy on prevention of sexual harassment at workplace prior to thecommencement of the CIR process. The said policy is in line with the provisions of theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013and the Rules made thereunder. The Company's Internal Complaints Committee (ICC) has beenformed prior to the commencement of the CIR process and its details are declared acrossthe organizations.
During the year under review it has been represented to the Resolution Professionalthat no complaints were reported to the ICC.
CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING
As per SEBI (Prohibition of Insider Trading) Regulations 2015 the Board of theCompany had prior to commencement of the CIR process laid down a Code of Conduct forProhibition of Insider Trading. The Code is applicable to Promoters and Promoter's Groupall Directors and such Designated Employees who are expected to have access to pricesensitive information relating to the Company. The Company Secretary is the ComplianceOfficer for monitoring adherence to the said Regulation.
SIGNIFICANT OR MATERIAL ORDERS THAT WERE PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS:
The National Company Law Tribunal ("NCLT") Hyderabad Bench vide Order datedJuly 10 2019 ("Insolvency Commencement Order") had initiated CorporateInsolvency Resolution Process ("CIRP") based on petition filed by theOperational Creditor under Section 9 of the Insolvency and Bankruptcy Code 2016("the Code") and had appointed Mr. Sreenivasa Rao Ravinuthala as Resolutionprofessional vide its order dated October 15 2019 to manage affairs of the Company inaccordance with the provisions of the Code.
To the best of our knowledge during the year under review the Company has notreceived any other order from the Regulators Courts or Tribunals which may impact theGoing Concern status or the Company's operations in future and that the Company hascomplied with all the requirements of the Listing Regulations with the Stock Exchanges aswell as regulations and guidelines of SEBI.
PARTICULARS OF EMPLOYEES:
None of the employees are in receipt of the remuneration as set out under the CompaniesAct 2013 and read with Rules made there under and as such the statement as required underthe Companies Act 2013 is not applicable.
LISTING OF SHARES
The shares of the company are listed on National Stock Exchange and on the Bombay StockExchange Limited (BSE) under INDONEXT model. The listing fee for the year 2020-21 hasalready been paid to the NSE.
Since the paid-up capital of the company is less than Rs. 10 Crores and the net worthof the Company is less than Rs.25 Crores the provisions of Regulations 17 17A 18 1920 2122 23 24 24A 25 26 27 and clauses (b) to (i) of sub-regulation (2) ofregulation 46 and para C D and E of Schedule V of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosures Requirements) Regulations 2015 are notapplicable to the Company hence corporate governance report has not been enclosed todirectors report. Further as per Notification no. SEBI/LAD-NRO/GN/2018/21 dated May 312018
regulations 17 18 19 20 and 21 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 related to Board of Directors Audit CommitteeNomination and Remuneration Committee Stakeholders Relationship Committee and RiskManagement Committee respectively shall not be applicable during the InsolvencyResolution Process period in respect of a listed entity which is undergoing CIRP under theCode and that the role and responsibilities of the Board of Directors as specified underregulation 17 shall be fulfilled by the Resolution Professional in accordance withsections 17 and 23 of the Code. Hence the status of the Board of Directors and Committeespresented in this Report is as just before the commencement of CIRP i.e. July 10 2019.
1) BOARD OF DIRECTORS
Composition of the Board
The Board of Directors of the Company has an optimum combination of Executive andNon-Executive Directors with not less than Fifty percent of the Board of Directorscomprising of Non-Executive Directors. The Company has whole time director and ExecutiveDirector and more than 60% of the Board consisting of Independent and NonExecutiveDirectors.
Meetings and Attendance:
During the financial year ended 31st March 2020 two board meetings were held beforethe commencement of the CIRP against your Company i.e. July 10 2019. After the suspensionof the Board of Directors and their powers the Resolution Professional has conducted fourboard meetings during the year to the limited extent for complying with the requirementsunder law on behalf of your Company.
a) Attendance of each Director at the Board Meetings held during the year 2019-20(Before and after commencement of CIRP) and at the Last Annual General Meeting;
|Sl. No ||Name and Designation of the Director ||Board Meetings held before CIRP ||Board Meetings held during after CIRP ||Board Meetings Attended during the year ||Attendance at Last AGM (Y es/No) |
|1 ||Mr. D.V.S Prakash Rao ||2 ||4 ||6 ||YES |
|2 ||Mr. Satya Srikanth Karaturi ||2 ||4 ||5 ||YES |
|3 ||Mr. Nekkanti Venkata Krishnayya ||2 ||4 ||2 ||YES |
|4 ||Mrs. Chukka Lakshmi ||2 ||4 ||2 ||NO |
Number of Board meetings held (before and after commencement of CIRP) dates on whichheld
The Board of Directors met 6 times during the year 2019-20 on April 12 2019; May 232019 August 8 2019; August 28 2019; November 13 2019; and February 13 2020
Independent Directors play an important role in the governance process of the Board.They bring to bear their expertise and experience on deliberations of the Board.
Pursuant to commencement of the CIR process of the Company the powers of the Boardstood suspended and were exercised by the resolution professional in accordance with theprovisions of the Code. No meetings of Independent directors were held during the yearunder review.
(a) AUDIT COMMITTEE
The Audit Committee constituted by the Company (during the period from April 1 2019 toJuly 10 2019) meets the requirement of Section 177 of the Act and Regulation 18 of SEBIListing Regulations.
During the year under review one Audit Committee meeting was held before thecommencement of CIRP i.e. July 10 2019. In view of the suspension of the Board ofDirectors and their powers no Audit Committee meetings were held after commencement ofthe CIRP. The Powers vested with the Audit Committee were also exercised by the ResolutionProfessional.
(b) NOMINATION AND REMUNERATION COMMITTEE
In terms of SEBI LODR Regulations a company undergoing CIRP process is not required tocomply with Regulation 19 of the SEBI LODR Regulations dealing with the requirements ofconstitution meetings and terms of reference of the nomination and remunerationcommittee.
No meetings of the Committee were held during the year ending 31st March 2020
(c) STAKEHOLDERS RELATIONSHIP COMMITTEE
No meeting of Stakeholders' Relationship Committee were held during the year ending31st March 2020. The Company had not received any complaint during the year and there isno complaint pending as on date. There was no valid request for transfer of shares pendingas on 31st March 2020.
CORPORATE SOCIAL RESPONSIBILITY
The Company is not covered under the criteria of the provision of Section 135 of theCompanies Act 2013 read with the Companies (Corporate Social Responsibility Policy)Rules2014 and therefore it is not mandatory to comply with the same.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to the provisions of Regulation 34(2) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a report on Management Discussion &Analysis is herewith annexed as "Annexure:2 " to this report.
I. The summary of the materially significant related party transactions is given in theNotes to the Accounts appearing in this Annual Report. However none of the related partytransactions have potential conflict with the interests of the Company at large as allthe transactions were entered into on an arms-length basis.
II. There were no instances of non-compliances nor have any penalties strictures beenimposed by Stock Exchanges or SEBI or any other statutory authority during the last threeyears on any matter related to the capital markets except identification of the Companyas a suspected Shell Company by the SEBI vide its letter dated August 07 2017 and anorder of the NSE vide letter dated January 19 2018 for the forensic audit of the Companyand imposition of fine by the NSE vide letter dated February 12 2020 for non-appointmentof Company Secretary & Compliance Officer under Regulation 6 (1) of SEBI LODRRegulations 2015 and non-submission of reports/ disclosures in the annual report for theyear ended 31st March 2019 vide letter dated March 23 2020.
III. The Company has complied with and adopted all the mandatory requirements of SEBILODR Regulations except the non-compliance with respect to the appointment of the CompanySecretary and Compliance Officer as mentioned above and with the nonmandatoryrequirements as Disclosures Communication and General Information to the shareholdersetc.
DIRECTORS' RESPONSIBILITY STATEMENT/STATEMENT TAKEN ON RECORD BY THE RESOLUTIONPROFESSIONAL
Pursuant to Section 134(5) of the Companies Act 2013 based on internal financialcontrols work performed by the internal statutory and secretarial auditors the reviewsperformed by the management and with the concurrence of the Audit Committee prior tocommencement of CIRP that for the year ended 31st March 2020 the confirmation is herebygiven for the Company having:
(a) in the preparation of annual accounts the applicable Accounting Standards had beenfollowed along with proper explanations relating to material departures;
(b) the Board had selected such accounting policies and applied them consistently andmade judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe loss of the Company for the year;
(c) the Board had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with provisions of the Act for safeguarding the assetsof the Company and for preventing and detecting fraud and other irregularities;
(d) the Board have prepared the annual accounts on a going concern basis;
(e) the Board had laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and were operating effectively; and
(f) the Board had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARINGS AND OUTGO:
The company has no activities relating to Conservation of Energy TechnologyAbsorption. The company has no Foreign Exchange earnings and Outgo during the year underreview.
EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in form MGT- 9 is annexedherewith as "Annexure: 3".
The Resolution Professional acknowledges and thanks all the employees customerssuppliers investors lenders regulatory and government authorities and stock exchangesfor their cooperation and support and look forward to their continued support in future.
For and behalf of Proseed India Limited (Company under Corporate Insolvency ResolutionProcess)
| ||Sd/- ||Sd/- |
| ||DVS Prakash Rao ||Sreenivasa Rao Ravinuthala |
| ||Director ||Resolution Professional |
|Place: Hyderabad || || |
|Date: 23-11-2020 || || |